Tesla Falls Short of Model 3 Production Numbers [Press Release]

Shaun Williams

This is not investment advice. The author has no position in any of the stocks mentioned. Wccftech.com has a disclosure and ethics policy.

Production numbers are finally officially in: The first quarter of the year saw Tesla (NASDAQ:TSLA) produce 34,494 vehicles overall, up 40% from the previous quarter.

However the piece of data most investors are actually looking for are the Model 3 specific production numbers. Tesla reported that for the last week of March production reached 2,020 models in the last seven day period of the month. Model 3 output totaled 9,766 units for the quarter compared to just over 1,800 Model 3's manufactured in the fourth quarter of 2017.

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The results are a bit of a mixed bag for Tesla. On the positive side this is indeed a massive increase compared to the quarter ending in December 2017. However, Tesla has been very clear in stating that it had intended to reach 2,500 Model 3 units each week by end of Q1 (remember they had originally forecasted 5,000 per week by end of Q1 2018).

These numbers are crucial for the automaker as cash reserves have been said to only be enough to last through the year and so cash flow is king for Tesla. The "mainstream" model promises to deliver solid margins but at much higher volume than its other, more expensive models.

Tesla may not need to raise further capital

Elon Musk with the Model 3

The biggest takeaway from today's press release may in fact be that if Model 3 production can crest 5,000 by the end of Q2 2018- the current goal as laid out by Elon Musk - then the company shouldn't need to raise any further capital which should provide a sigh of relief to many investors.

The Palo Alto outfit said as much during today's release:

Given the progress made thus far and upcoming actions for further capacity improvement, we expect that the Model 3 production rate will climb rapidly through Q2. Tesla continues to target a production rate of approximately 5,000 units per week in about three months, laying the groundwork for Q3 to have the long-sought ideal combination of high volume, good gross margin and strong positive operating cash flow. As a result, Tesla does not require an equity or debt raise this year, apart from standard credit lines.

The question that remains after today's official announcement would be exactly how sustainable these production numbers are. With a sample size of a only a week, its possible the automaker pulled forward bottleneck inventory from the coming weeks or utilized additional shifts from either Model S or Model X workers to reach the output number it quoted.

An internal memo was circulated just days ago almost alluding to this fact that showed the company asking for "volunteers" to aid in Model 3 production. This comes at a perilous time for Tesla amidst a whirlwind of negative news.. We've recently reported on the debt downgrade Tesla suffered at the hands of Moodys , a fatal crash the automaker's autopilot is implicated in, production woes and a stock downgrade by Goldman Sachs, and even Elon Musk himself added to the fire recently this weekend with an ill-timed April Fools joke.

As of this writing the market has reacted favorably to this bit of news as share prices are up over 6% ,$268 for the day. Tesla will report its earnings on or near May 2nd and be sure to look for our coverage and analysis immediately after results are in.

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